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Financial Post: Analysts doubts there will be competing bid for Centurion

By Jon Harding,
Published: Monday, November 13, 2006

Calgary-based Centurion Energy International Inc. is up 84¢ to $11.92 mid-afternoon after receiving a $12-per-share from United Arab Emirates-based Dana Gas PJSC.

At least one brokerage doubts Royal Dutch Shell PLC will make a competing bid for Calgary-based Centurion. In a research note to clients, Canaccord Adams analyst Terry Peters said Dana’s offer is both fair and full, and the brokerage raised its target for Centurion from $10 to $12, lowering its rating on the stock from “buy” to “hold.”

Sharjah, U.A.E.-based Dana is a natural gas company that operates in the Arabian Gulf and is listed on the Abu Dhabi stock market. By acquiring TSX-listed Centurion for about $1.25-billion, Dana will gain holdings in Egypt, Tunisia and offshore West Africa.

Canaccord Adams said it was surprised Royal Dutch Shell did not emerge as the suitor for Centurion — which said on Oct. 30 it had entered unsolicited talks — because the two have been joint-venture partners exploring for gas in Egypt since March, drilling five wells together.

Royal Dutch Shell is approaching the point of having to make a decision about paying Centurion another US$20-million to renew the partnership.

“RDS was in a perfect position to [buy Centurion] … it had access to all the technical data on the blocks,” Mr. Peters wrote. He suggested the bid from Dana, which needs new gas supplies because it is locked in a pricing dispute for supplies from Iran, seems even more aggressive given the fact RDS can keep its 50% interest in the Egyptian prospect for just US$20-million, or walk.

“Given that RDS wanted to negotiate around its US$20-million commitment, it would seem odd that they would step up and outbid Dana’s full offer price, particularly now when there is a right by Dana to match any superior competing offer. … We anticipate Centurion shares will trade just under the offer price,” Mr. Peters wrote.

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